Australia. Dai-ichi Mutual, Japan’s third largest life insurer, has
bought a 29.7 percent stake in Australian life insurer TOWER
Australia Group (TAG) from UK investment company Guinness Peat
Group for A$376 million ($336 million).
Of the total stake 14.9 percent has been acquired unconditionally,
5 percent is subject to regulatory approval and 9.8 percent subject
to regulatory and shareholder approval.
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The deal with Dai-ichi brings with it a business cooperation
agreement that TAG’s chairman Rob Thomas said would result in the
transfer of “significant additional expertise” to TAG. Aspects
covered include transfer of Dai-ichi employees to TAG and
technology, reinsurance and fund management cooperation.
In addition Dai-ichi will actively support TAG’s development of
bancassurance relationships and provision of group insurance to
Australian affiliates of Japanese companies with which Dai-ichi has
strong relationships.
Australia’s fourth largest life insurer based on premium income,
TAG reported in-force premium income of A$694 million as at 30
June, a year-on-year increase of 11.6 percent. Net profit in the
first half of 2008 was A$30.9 million, up 81 percent compared with
the first half of 2007.
TAG’s origins go back to 1869 when the Government Life Insurance
Office (GLIO) was created in New Zealand with its initial capital
provided by the New Zealand government. GLIO was renamed TOWER in
1990 and entered Australia the same year with the purchase of an
Australian life business.
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By GlobalDataTOWER demutualised in 1999 and in 2006 relinquished control of it
Australian operations in a formal demerger that led to the creation
of TAG as an autonomous company.
Dai-ichi Life believes its investment in TAG represents what it
termed a unique opportunity to participate in a fast growing life
insurance market. Based on projections highlighted by TOWER in a
recent presentation Australia’s life insurance industry’s total
premium income is anticipated to increase from A$6 billion in 2007
to A$19 billion in 2017. This would represent a CAGR of 12.7
percent.
Dai-ichi’s purchase of a stake in TOWER follows investments made in
recent years in four other Asia-Pacific markets: Taiwan, India,
Thailand and Vietnam.
